Surfsand Resort, LLC v. Nationwide Mutual Fire Insurance Co. et al

Filing 51

Opinion and Order. The Court DENIES Plaintiff's Motion (# 32 ) for Summary Judgment, GRANTS Defendants' Cross-Motion (# 36 ) for Summary Judgment, and DISMISSES this matter. IT IS SO ORDERED. See attached order for details. Signed on 6/28/18 by Judge Anna J. Brown. (jy)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

SURFSAND RESORT, LLC, an
Oregon limited liability
company,
Plaintiff,
v.
NATIONWIDE MUTUAL FIRE
INSURANCE COMPANY, an Ohio
company, and HARLEYSVILLE
INSURANCE COMPANY, a
Pennsylvania company,
Defendants.

JAMES LEE GUSE
Barker Martin
1500 S.W. First Avenue
Suite 980
Portland, OR 97201
[phone]
Attorneys for Plaintiff
DIANE L. POLSCER
BRIAN C. HICKMAN
Gordon & Polscer, LLC
9755 S.W. Barnes Road
Suite 650
Portland, OR 97225
[phone]

1 - OPINION AND ORDER

3:17-cv-00866-BR
OPINION AND ORDER

KAYLEIGH T. KEILTY
PATRICIA M. LAMBERT
Pessin Katz Law, P.A.
901 Dulaney Valley Road
Suite 500
Towson, MD 21204
[phone]
Attorneys for Defendants
BROWN, Senior Judge.
This matter comes before the Court on Plaintiff’s Motion
(#32) for Summary Judgment and Defendants’ Cross-Motion (#36) for
Summary Judgment.

The Court concludes the record is sufficiently

developed such that oral argument would not be helpful to resolve
these Motions.

For the reasons that follow, the Court DENIES

Plaintiff’s Motion, GRANTS Defendants’ Motion, and DISMISSES this
matter.

BACKGROUND
The following facts are taken from Plaintiffs’ Complaint and
the parties’ filings related to their Motions for Summary
Judgment.
On September 14, 2015, Defendants Nationwide Mutual Fire
Insurance Company and Harleysville Insurance Company issued to
Plaintiff Surfsand Resort, LLC, a Standard Flood Insurance Policy
(SFIP) pursuant to the National Flood Insurance Act (NFIA), 42
U.S.C. § 4001(a).

The policy period was from September 14, 2015,

2 - OPINION AND ORDER

through September 14, 2016.

The policy “insure[d] [Plaintiff]

against direct physical loss by or from flood.”
of Agreed Facts at ¶ 5.

Joint Statement

The policy, however, imposed “restricted

coverage on building items located in a ‘basement,’ which it
define[d] as ‘[a]ny area of the building, including any sunken
room or sunken portion of a room, having its floor below ground
level (subgrade) on all sides.’”

Joint Statement of Agreed Facts

at ¶ 6 (quoting Ex. 1, Art. II(B)(5)).
The policy also provided “‘[w]ithin 60 days after the loss,
send us a proof of loss, which is your statement of the amount
you are claiming under the policy signed and sworn to by you.’”
Joint Statement of Agreed Facts at ¶ 8 (quoting Ex. 1, Art.
VII(J)(4)) (emphasis in original).

Finally, the policy provided:

“If we reject your proof of loss in whole or in
part you may: (a) Accept such denial of your
claim; (b) Exercise your rights under this policy;
or (c) File an amended proof of loss as long as it
is filed within 60 days of the date of the loss.”
Joint Statement of Agreed Facts at ¶ 9 (quoting Ex. 1, Art.
VII(M)(2)).
On December 11, 2015, the tidal waters of the Pacific Ocean
overflowed and damaged the bottom level of hotel rooms at the
Surfsand Resort in Cannon Beach, Oregon, which Plaintiff owned.
On December 22, 2015, Nationwide received its first notice
of loss from Plaintiff.
“The claim was assigned to Colonial Claims Corporation who

3 - OPINION AND ORDER

assigned Jacob Valencia to serve as the independent adjuster.”
Joint Statement of Agreed Facts at ¶ 13.

Valencia advised

Plaintiff:
I am the eyes and ears of the insurance company.
I cannot bind them. I cannot tell you what amount
of money you will be paid. My job is to make
assessment for the insurance company of the damage
under the policy coverage based on my knowledge
and experience. My assessment will be subject to
the insurance company’s approval.
* * *
Your insurance policy is a written contract with
stated terms and conditions. Please comply with
them and specifically we want to note you should
file a Proof of Loss within sixty days from the
date of your event. Please see VII. General
Conditions, p12 of 19 for details on the proof of
loss.
Joint Statement of Agreed Facts at ¶¶ 13-14.
On May 4, 2016, Plaintiff executed a signed and sworn Proof
of Loss in the amount of $98,765.08.

Joint Statement of Agreed

Facts at ¶ 17.
At some point before June 2, 2016, Plaintiff requested the
Federal Emergency Management Agency (FEMA) to grant Plaintiff a
waiver of the 60-day Proof of Loss deadline contained in the SFIP
with respect to Plaintiff’s Proof of Loss in the amount of
$98,765.08.
On June 2, 2016, FEMA granted Plaintiff a limited waiver of
the 60-day Proof of Loss deadline as follows:
Based on the information you submitted, your
request for a waiver of the 60 day Proof of Loss
4 - OPINION AND ORDER

policy provision is approved. This limited waiver
is for only the amount of the loss and scope of
the damages outlined in this request and otherwise
does not waive the proof of loss or any other
requirement of the [SFIP] and makes no other
comment because of lack of information.
Decl. of Brian C. Hickman, Ex. 4 at 2 (emphasis added).
On June 3, 2016, Nationwide sent Plaintiff a coveragedetermination letter enclosing a check for $98,765.08 and
advising Plaintiff that it was denying coverage for
damages to the insured contents and all
non-covered items located in the basement pursuant
to the SFIP and quoted the relevant policy
language. The letter also explained the appeal
process and provisions related to filing suit
against Nationwide.
Joint Statement of Agreed Facts at ¶ 19.1
On July 14, 2016, Plaintiff appealed Nationwide’s denial of
coverage for damage to the “non-covered items located in the
basement” to FEMA.

Specifically, Plaintiff disputed Nationwide’s

determination that Plaintiff’s property had a basement within the
meaning of the SFIP.
On October 19, 2016, FEMA advised Plaintiff that an
inspection by John Garner, an Oregon licensed engineer, was
“necessary because the elevations of the lowest floor and
adjacent grades of your building are unclear.”

Hickman Decl.,

Ex. 7 at 1.
On December 29, 2016, Gardner issued his Engineering Report

1

The June 3, 2016, letter is not in the record.

5 - OPINION AND ORDER

in which he concluded:
It is my opinion that a reasonable interpretation
of ground level should involve a natural drainage
runoff. Simply considered, if a portion of a
building would accumulate water in rains unless
water is pumped or drained away, it is reasonably
below ground level. Thus, if all areas of the
floor are below ground level on all sides, the
floor would hold water unless it were physically
drained through plumbing or storm drains.
Conversely, if an area of the floor is above
ground level, then it would not hold water and
water would drain away naturally.
* * *
In this particular case, the lower floor units are
blocked from any natural drainage by the grassy
area between them and the beach. The only way
runoff can drain away is via French drains on the
patios. The lower level below ground level on all
sides, and the nearest lower ground is more than
25 feet away, outside the sea wall. The grassy
area and sea wall block any natural positive
drainage away from the interior, thus it is
reasonable to conclude that the interior units are
below ground level on all sides.
Based upon a review of the available data, it is
my opinion that the lower floor of the Surfsand
Resort Beachfront Building is below ground level
on all sides and thus does [in] fact meet the
definition of a basement as denied in the Standard
Flood Insurance Policy. This floor should be
considered a basement for policy purposes,
including Units 1101-1112, the hallway, and the
storage area.
Decl. of James Guse, Ex. 7 at 6-7.
On March 23, 2017, Nationwide advised Plaintiff that it had
reviewed Gardner’s Report and that it was “upholding our denial
of non-covered items in a basement as indicated in our letter of
June 3, 2016.”

Guse Decl., Ex. 8 at 1.

6 - OPINION AND ORDER

On June 2, 2017, Plaintiff filed an action in this Court
against Nationwide and Harleysville asserting claims for breach
of insurance contract and negligence per se.

Plaintiff seeks

damages in the amount of $396,234.92, “which represents the
amount of the covered loss denied by Defendants”; seeks
attorneys’ fees; and requests a jury trial.
On August 21, 2017, Defendants filed a Motion to Dismiss
Count II of Plaintiff’s Complaint and a Motion to Strike Jury
Demand in which they sought an order dismissing Plaintiff’s claim
for negligence per se, request for attorneys’ fees, and demand
for a jury trial.
On October 16, 2017, the Court issued an Opinion and Order
in which it granted Defendants’ Motion to Dismiss and Motion to
Strike Jury Demand.
On March 15, 2018, Plaintiff filed a Motion for Summary
Judgment.

On April 5, 2018, Defendants filed a Cross-Motion for

Summary Judgment.

The Court took the Motions under advisement on

May 3, 2018.

STANDARDS
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Washington Mut. Ins. v. United

States, 636 F.3d 1207, 1216 (9th Cir. 2011).
7 - OPINION AND ORDER

See also Fed. R.

Civ. P. 56(a).

The moving party must show the absence of a

genuine dispute as to a material fact.
673 F.3d 1218, 1223 (9th Cir. 2012).

Emeldi v. Univ. of Or.,

In response to a properly

supported motion for summary judgment, the nonmoving party must
go beyond the pleadings and point to "specific facts
demonstrating the existence of genuine issues for trial."

In re

Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010)
"This burden is not a light one. . . .

The non-moving party must

do more than show there is some 'metaphysical doubt' as to the
material facts at issue."

Id. (citation omitted).

A dispute as to a material fact is genuine "if the evidence
is such that a reasonable jury could return a verdict for the
nonmoving party."

Villiarimo v. Aloha Island Air, Inc., 281 F.3d

1054, 1061 (9th Cir. 2002)(quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).

The court must draw all

reasonable inferences in favor of the nonmoving party.
v. Verity, Inc., 606 F.3d 584, 587 (9th Cir. 2010).

Sluimer

"Summary

judgment cannot be granted where contrary inferences may be drawn
from the evidence as to material issues."

Easter v. Am. W. Fin.,

381 F.3d 948, 957 (9th Cir. 2004)(citing Sherman Oaks Med. Arts
Ctr., Ltd. v. Carpenters Local Union No. 1936, 680 F.2d 594, 598
(9th Cir. 1982)).
"A non-movant's bald assertions or a mere scintilla of
evidence in his favor are both insufficient to withstand summary
8 - OPINION AND ORDER

judgment."

F.T.C. v. Stefanchik, 559 F.3d 924, 929 (9th Cir.

2009)(citation omitted).

When the nonmoving party's claims are

factually implausible, that party must "come forward with more
persuasive evidence than otherwise would be necessary."

LVRC

Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009)
(citing Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1149
(9th Cir. 1998)).
The substantive law governing a claim or a defense
determines whether a fact is material.

Miller v. Glenn Miller

Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

If the

resolution of a factual dispute would not affect the outcome of
the claim, the court may grant summary judgment.

Id.

DISCUSSION
Plaintiff moves for summary judgment on the ground that
there is not any genuine dispute of material fact that the lowest
level of the Surfsand Resort is not a basement within the meaning
of the SFIP.

According to Plaintiff, it is, therefore, entitled

to coverage for damages in the amount of $396,234.92, “which
represents the amount of the covered loss denied by Defendants.”
Defendants, on the other hand, move for summary judgment on
the ground that it paid Plaintiff $98,765.08, which is the amount
of the only Proof of Loss that Plaintiff submitted to Defendants.
Moreover, Plaintiff has never submitted a supplemental Proof of
9 - OPINION AND ORDER

Loss for the $396,234.92 that it now seeks in this action, and,
therefore, Plaintiff has not satisfied a condition precedent of
the SFIP.

Defendants also contend the lowest level of the

Surfsand Resort is a basement within the meaning of the policy,
and, therefore, Plaintiff’s requested damages are not covered
under the policy.
I.

National Flood Insurance Program
Congress enacted the NFIA in 1968 in response to the fact

that flood disasters were creating personal hardships and
economic distress that was “increasing [the] burden on the
Nation's resources” and the exposure to flood losses was
“growing.”

42 U.S.C. § 4001(a).

The NFIA created the National

Flood Insurance Program (NFIP) under the administration of FEMA
to “mak[e] flood insurance coverage available on reasonable terms
and conditions.”

Id.

See also 42 U.S.C. § 4011.

Flood

insurance under the NFIP is sold to qualified applicants either
directly by FEMA or by private insurance companies known as
“write-your-own” (WYO) Companies.

44 C.F.R. § 62.23.

A WYO

Company enters into a standardized agreement with FEMA that
authorizes the WYO Company to issue flood insurance in its own
name and assigns the WYO Company the responsibility for “the
adjustment, settlement, payment and defense of all claims arising
from policies of flood insurance it issues under the Program.”
44 C.F.R. § 62.23(d).
10 - OPINION AND ORDER

Nevertheless, the ultimate responsibility

for paying all claims remains with FEMA.

See 42 U.S.C.

§ 4017(a).
The NFIA regulations specify the required terms and
conditions of policies written under the NFIP.

For example, the

SFIP must advise the insured that FEMA is providing insurance
“under the terms of the National Flood Insurance Act of 1968 and
its Amendments, and Title 44 of the Code of Federal Regulations.”
44 C.F.R. pt. 61, app. A(1), art. I.

The SFIP also must identify

the scope of coverage, the exclusions, the deductions, and the
general conditions applicable to coverage, adjustment, and
payment.

The SFIP must also include the following provision:
This policy and all disputes arising from the
handling of any claim under the policy are
governed exclusively by the flood insurance
regulations issued by FEMA, the National Flood
Insurance Act of 1968, as amended (42 U.S.C.
§ 4001, et seq.), and Federal common law.2

44 C.F.R. pt. 61, app. A(1), art. IX.

WYO Companies cannot waive

or vary the terms or conditions of the SFIP without the express,
written consent of the Federal Insurance Administrator.

44

C.F.R. § 61.13(d).
In addition, the SFIP also must include the following
conditions and limitations for filing actions for claims under
SFIPs and for disputes arising out of the handling of any claim
under an SFIP:

2

The SFIP at issue included all of the required language
identified above.
11 - OPINION AND ORDER

You may not sue us to recover money under this
policy unless you have complied with all the
requirements of the policy. . . . This
requirement applies to any claim that you may have
under this policy and to any dispute that you
may have arising out of the handling of any claim
under the policy.
44 C.F.R. pt. 61, app. A(1), art. VII(R).

See also 42 U.S.C.

§ 4072; 44 C.F.R. § 62.22.
“In short, [SFIP], claims under [SFIPs], and disputes
relating to the handling of claims under [SFIPs] are highly
regulated.”

Woodson v. Allstate Ins. Co., 855 F.3d 628, 622-23

(4th Cir. 2017).

See also Suopys v. Omaha Prop. & Cas., 404 F.3d

805, 809 (3d Cir. 2005)(“Because any claim paid by a WYO Company
is a direct charge to the United States Treasury, strict
adherence to the conditions precedent to payment is required.”)
(citing Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-85
(1947); Flick v. Liberty Mut., 205 F.3d 386 (9th Cir. 2000)
(strict compliance is applied to policies written by WYO
Companies under the NFIP because flood-loss claims are paid from
United States Treasury).
II.

Plaintiff failed to satisfy a condition precedent of the
SFIP.
As noted, Defendants move for summary judgment on the ground

that Plaintiff has never submitted a supplemental Proof of Loss
for the $396,234.92 that it now seeks in this action.

According

to Defendants, therefore, Plaintiff has not satisfied a condition
precedent of the SFIP, and, accordingly, Plaintiff may not bring
12 - OPINION AND ORDER

a claim for those damages.
It is undisputed that Plaintiff submitted to Defendants a
Proof of Loss on May 4, 2016, asserting a claim for $98,765.08.
As noted, however, the record does not reflect Plaintiff
submitted any supplemental or additional Proof of Loss to
Defendants for the $396,234.92 that it now seeks as damages.
The SFIP provides in relevant part:
In case of a flood loss to insured property, you
must:
* * *
3.

Prepare an inventory of damage property
showing the quantity, description, actual
cash value, and amount of loss. Attach all
bills, receipts, and related documents.

4.

Within 60 days after the loss, send us a
proof of loss, which is your statement of the
amount you are claiming under the policy
signed and sworn to by you, and which
furnishes us with the following information:
* * *
f.

Specifications of damaged buildings and
detailed repair estimates; [and]
* * *

i.

The inventory of damaged property
described in J.3 above.

Hickman Decl., Ex. 1 at Art VII(J)(4)(emphasis added).
44 C.F.R. § 61, App. A(2), Art. VII(J)(4)(same).

See also

The SFIP

provides if the insurer rejects the Proof of Loss “in whole or in
part,” the insured “may”:

13 - OPINION AND ORDER

a.

Accept such denial of your claim;

b.

Exercise your rights under this policy; or

c.

File an amended proof of loss, as long as it
is filed within 60 days of the date of the
loss.

Hickman Decl., Ex. 1 at Art VII(M)(2).
The Ninth Circuit and other courts have held a timely signed
and sworn Proof of Loss is a condition precedent to an insured
obtaining benefits under an SFIP policy.

See Pecarovich v.

Allstate Ins. Co., 309 F.3d 652, 659-60 (9th Cir. 2002)
(concluding the plaintiff failed to satisfy the condition
precedent of the SFIP when he did not file a proof of loss).

See

also Dickson v. Am. Bankers Ins. Co. of Fl., 739 F.3d 397, 399
(8th Cir. 2014)(“[T]he proof of loss requirement is a regulatory
limit on the disbursement of funds through a federal insurance
program; as such ‘it is to be strictly construed [for it] serves
as a condition precedent to recovery under the SFIP.’” (quoting
Gunter v. Farmers Ins. Co., 736 F.3d 768, 773 (8th Cir. 2013));
DeCosta v. Allstate Ins. Co., 730 F.3d 76, 84 (1st Cir. 2013)
(“Given that it is the government's liability at stake in any
suit against a WYO insurer, compliance with the proof-of-loss
provision serves as a “condition[ ] precedent to a waiver by the
federal government of its sovereign immunity.”).
Although the Ninth Circuit has not addressed the issue,
other courts have held an insured must submit an additional or

14 - OPINION AND ORDER

supplemental proof of loss as a condition precedent “to recover
an additional amount on a preexisting claim under a[n] SFIP.”
Cummings v. Fidelity Nat. Indem. Ins. Co., 636 F. App’x 221, 22324 (5th Cir. 2016).

See also Dickson, 739 F.3d at 399 (“a signed

and sworn proof of loss claims only the amounts listed in those
forms, and the insured must timely file an additional proof of
loss to claim any additional amount of money.”).

As the Fifth

Circuit explained in Cummings,
a policy of “‘insurance issued pursuant to a
federal program must be strictly construed and
enforced.’” Monistere, 559 F.3d at 394 (quoting
Gowland, 143 F.3d at 954). “Because insurance
companies act as ‘fiscal agents' of the government
under the National Flood Insurance Program, all
policy awards deplete federally allocated funds.”
Id. (quoting In re Estate of Lee, 812 F.2d 253,
256 (5th Cir. 1987)). Accordingly, “‘not even the
temptations of a hard case’ will provide a basis
for ordering recovery contrary to the terms of a
regulation, for to do so would disregard ‘the duty
of all courts to observe the conditions defined by
Congress for charging the public treasury.’” Id.
(quoting Forman v. Fed. Emergency Mgmt. Agency,
138 F.3d 543, 545 (5th Cir. 1998)). See generally
Richmond Printing LLC v. Dir. Fed. Emergency Mgmt.
Agency, 72 F. App’x 92, 97 (5th Cir. 2003)(citing
Kerr v. FEMA, 113 F.3d 884 (8th Cir. 1997))
(finding that completion of the proof of loss is
the insured's own responsibility and “any reliance
on statements made by the adjuster that
contradicted the terms of the SFIP was
unreasonable as a matter of law; the insured had a
duty to read the policy and acted unreasonably in
relying on adjusters provided only as a
‘courtesy’”); see also Gowland, 143 F.3d at 955
(quoting Fed. Crop Ins. Corp. v. Merrill, 332 U.S.
380, 385 (1947))(“Requiring [insured parties] to
turn square corners when dealing with the Treasury
‘does not reflect a callous outlook. It merely
expresses the duty of all courts to observe the
15 - OPINION AND ORDER

conditions defined by Congress for charging the
public treasury.’”).
636 F. App’x at 224.
Plaintiff does not dispute it failed to file a supplemental
or additional proof of loss seeking the additional damages of
$396,234.92 that it now seeks.

Plaintiff, however, asserts it

provided all “of the documentation regarding damaged areas . . .
and its contents” to claims adjuster Jacob Valencia who
“specifically excluded items that he considered to be in a
basement.”

Decl. of Ted Stark at ¶ 4.

Plaintiff points out that

Valencia advised Plaintiff in February and April 2016 (before
Plaintiff filed the May 2016 proof of loss) that “a Proof of Loss
was only to act as a ‘minimum’ of items that are flood damaged.
He further indicated that any ‘covered, omitted or reasonable
cost difference’ could be addressed with a Claim for Additional
Payment (CAP).”

Id.

Plaintiff argues Valencia was acting as

Defendants’ agent, and, therefore, Valencia’s refusal to submit
all of the damages either waived the requirement or absolved
Plaintiff of the responsibility to submit a supplemental proof of
loss as to the damages that Plaintiff now seeks.

Arguments

similar to those made by Plaintiff, however, have been rejected
by various courts.
For example, the Eighth Circuit explained in Dickson:
The SFIP defines the proof of loss as the
insureds' signed and sworn “statement of the
amount [they] are claiming under the policy.”
16 - OPINION AND ORDER

44 C.F.R. pt. 61 app. A(1), art. VII(J)(4).
Independent insurance adjusters may assist the
insureds by providing or preparing this proof of
loss form, but the SFIP is clear that even with
such assistance the insureds must use their own
judgment concerning the amount of loss they claim.
* * *
Among the significant SFIP provisions concerning
the proof of loss requirement is a rule that “[i]n
completing the proof of loss, [the insureds] must
use [their] own judgment concerning the amount of
loss and justify that amount.” 44 C.F.R. pt. 61
app. A(1), art. VII(J)(5). While insurance
adjusters may assist with preparing the proof of
loss form, they do so as “a matter of courtesy
only” and insureds are ultimately responsible for
ensuring their claim is timely filed. Id., art.
VII(J)(7). Thus as a matter of law, the
[plaintiffs] were the only parties responsible for
ensuring compliance with the proof of loss
requirement, including the determination of the
“amount of loss.”
* * *
[T]he SFIP requires insureds to use their own
judgment to determine the amount of loss they
claim. It was therefore solely the [plaintiffs']
own responsibility to file a timely proof of loss
for any amount they believed was covered by the
policy.
Dickson, 739 F.3d at 399-400.

Similarly, in DaCosta the court

noted
FEMA must provide express written consent . . . to
waive any of the requirements outlined in [an]
SFIP. The SFIP's waiver provision states, “[t]his
policy cannot be changed nor can any of its
provisions be waived without the express written
consent of the Federal Insurance Administrator.
No action we take under the terms of this policy
constitutes a waiver of any of our rights.”
44 C.F.R. pt. 61, App. a(1), Art. VII(D).

17 - OPINION AND ORDER

The SFIP's stringent waiver provision reflects the
fact that private insurers are “fiscal agents of
the United States,” 42 U.S.C. § 4071(a)(1), as
opposed to general agents. See McGair, 693 F.3d
at 96. Thus, consistent with their duty to
strictly enforce the SFIP, private insurance
companies can “[vary] the terms of a policy only
with FEMA's express written consent.” Jacobson,
672 F.3d at 175. . . . [T]he SFIP “explicitly
preclude[s] oral waiver or waiver by conduct.
730 F.3d at 87.
In Dickson the court also rejected the plaintiffs’ assertion
that their claims adjuster engaged in misconduct when it
inaccurately advised them about the amount of their proof of
loss:
The adjuster explained . . . the [plaintiffs]
could “always submit a supplemental claim for
additional damages.” The [plaintiffs] were thus
alerted to the potential need for filing a
supplemental claim. . . . Moreover, the SFIP
provides clear directives that the [plaintiffs]
needed to file a proof of loss for their claim
. . . . The responsibility to ensure compliance
with the prerequisites for filing suit lay with
the [plaintiffs].
Id. at 401.
This Court adopts the reasoning of Cummings, DaCosta, and
Dickson and concludes Plaintiff’s submission of an additional or
supplemental proof of loss is a condition precedent to recover an
additional amount on a preexisting claim under an SFIP.

The

Court also concludes Valencia’s alleged refusal to submit a claim
for damages related to the part of Plaintiff’s property that he
believed to be a basement is insufficient to waive the

18 - OPINION AND ORDER

supplemental proof-of-loss requirement because Plaintiff had an
independent duty to determine the amount of its own loss; FEMA
did not waive the SFIP requirement to submit a supplemental proof
of loss; and Valencia, in fact, informed Plaintiff that “any
covered, omitted or reasonable cost difference could be addressed
with a Claim for Additional Payment.”

Thus, on this record the

Court concludes Plaintiff failed to comply with the condition
precedent for seeking additional damages within the time required
by the SFIP and FEMA.

The Court, therefore, grants that portion

of Defendants’ Motion for Summary Judgment based on Plaintiff’s
failure to file a supplemental proof of loss.
In addition, because the Court has concluded Plaintiff
failed to satisfy a condition precedent before bringing this
action, the Court does not have the authority to decide whether
the lower level of Plaintiff’s property is a basement within the
meaning of the SFIP, and, therefore, the Court does not express
any opinion on that issue.

Accordingly, the Court denies

Plaintiff’s Motion for Summary Judgment.

CONCLUSION
For these reasons, the Court DENIES Plaintiff’s Motion (#32)
for Summary Judgment, GRANTS Defendants’ Cross-Motion (#36) for

19 - OPINION AND ORDER

Summary Judgment, and DISMISSES this matter.
IT IS SO ORDERED.
DATED this 28th day of June, 2018.
/s/ Anna J. Brown
ANNA J. BROWN
United States Senior District Judge

20 - OPINION AND ORDER

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

SURFSAND RESORT, LLC, an
Oregon limited liability
company,
Plaintiff,
v.
NATIONWIDE MUTUAL FIRE
INSURANCE COMPANY, an Ohio
company, and HARLEYSVILLE
INSURANCE COMPANY, a
Pennsylvania company,
Defendants.

JAMES LEE GUSE
Barker Martin
1500 S.W. First Avenue
Suite 980
Portland, OR 97201
[phone]
Attorneys for Plaintiff
DIANE L. POLSCER
BRIAN C. HICKMAN
Gordon & Polscer, LLC
9755 S.W. Barnes Road
Suite 650
Portland, OR 97225
[phone]

1 - OPINION AND ORDER

3:17-cv-00866-BR
OPINION AND ORDER

KAYLEIGH T. KEILTY
PATRICIA M. LAMBERT
Pessin Katz Law, P.A.
901 Dulaney Valley Road
Suite 500
Towson, MD 21204
[phone]
Attorneys for Defendants
BROWN, Senior Judge.
This matter comes before the Court on Plaintiff’s Motion
(#32) for Summary Judgment and Defendants’ Cross-Motion (#36) for
Summary Judgment.

The Court concludes the record is sufficiently

developed such that oral argument would not be helpful to resolve
these Motions.

For the reasons that follow, the Court DENIES

Plaintiff’s Motion, GRANTS Defendants’ Motion, and DISMISSES this
matter.

BACKGROUND
The following facts are taken from Plaintiffs’ Complaint and
the parties’ filings related to their Motions for Summary
Judgment.
On September 14, 2015, Defendants Nationwide Mutual Fire
Insurance Company and Harleysville Insurance Company issued to
Plaintiff Surfsand Resort, LLC, a Standard Flood Insurance Policy
(SFIP) pursuant to the National Flood Insurance Act (NFIA), 42
U.S.C. § 4001(a).

The policy period was from September 14, 2015,

2 - OPINION AND ORDER

through September 14, 2016.

The policy “insure[d] [Plaintiff]

against direct physical loss by or from flood.”
of Agreed Facts at ¶ 5.

Joint Statement

The policy, however, imposed “restricted

coverage on building items located in a ‘basement,’ which it
define[d] as ‘[a]ny area of the building, including any sunken
room or sunken portion of a room, having its floor below ground
level (subgrade) on all sides.’”

Joint Statement of Agreed Facts

at ¶ 6 (quoting Ex. 1, Art. II(B)(5)).
The policy also provided “‘[w]ithin 60 days after the loss,
send us a proof of loss, which is your statement of the amount
you are claiming under the policy signed and sworn to by you.’”
Joint Statement of Agreed Facts at ¶ 8 (quoting Ex. 1, Art.
VII(J)(4)) (emphasis in original).

Finally, the policy provided:

“If we reject your proof of loss in whole or in
part you may: (a) Accept such denial of your
claim; (b) Exercise your rights under this policy;
or (c) File an amended proof of loss as long as it
is filed within 60 days of the date of the loss.”
Joint Statement of Agreed Facts at ¶ 9 (quoting Ex. 1, Art.
VII(M)(2)).
On December 11, 2015, the tidal waters of the Pacific Ocean
overflowed and damaged the bottom level of hotel rooms at the
Surfsand Resort in Cannon Beach, Oregon, which Plaintiff owned.
On December 22, 2015, Nationwide received its first notice
of loss from Plaintiff.
“The claim was assigned to Colonial Claims Corporation who

3 - OPINION AND ORDER

assigned Jacob Valencia to serve as the independent adjuster.”
Joint Statement of Agreed Facts at ¶ 13.

Valencia advised

Plaintiff:
I am the eyes and ears of the insurance company.
I cannot bind them. I cannot tell you what amount
of money you will be paid. My job is to make
assessment for the insurance company of the damage
under the policy coverage based on my knowledge
and experience. My assessment will be subject to
the insurance company’s approval.
* * *
Your insurance policy is a written contract with
stated terms and conditions. Please comply with
them and specifically we want to note you should
file a Proof of Loss within sixty days from the
date of your event. Please see VII. General
Conditions, p12 of 19 for details on the proof of
loss.
Joint Statement of Agreed Facts at ¶¶ 13-14.
On May 4, 2016, Plaintiff executed a signed and sworn Proof
of Loss in the amount of $98,765.08.

Joint Statement of Agreed

Facts at ¶ 17.
At some point before June 2, 2016, Plaintiff requested the
Federal Emergency Management Agency (FEMA) to grant Plaintiff a
waiver of the 60-day Proof of Loss deadline contained in the SFIP
with respect to Plaintiff’s Proof of Loss in the amount of
$98,765.08.
On June 2, 2016, FEMA granted Plaintiff a limited waiver of
the 60-day Proof of Loss deadline as follows:
Based on the information you submitted, your
request for a waiver of the 60 day Proof of Loss
4 - OPINION AND ORDER

policy provision is approved. This limited waiver
is for only the amount of the loss and scope of
the damages outlined in this request and otherwise
does not waive the proof of loss or any other
requirement of the [SFIP] and makes no other
comment because of lack of information.
Decl. of Brian C. Hickman, Ex. 4 at 2 (emphasis added).
On June 3, 2016, Nationwide sent Plaintiff a coveragedetermination letter enclosing a check for $98,765.08 and
advising Plaintiff that it was denying coverage for
damages to the insured contents and all
non-covered items located in the basement pursuant
to the SFIP and quoted the relevant policy
language. The letter also explained the appeal
process and provisions related to filing suit
against Nationwide.
Joint Statement of Agreed Facts at ¶ 19.1
On July 14, 2016, Plaintiff appealed Nationwide’s denial of
coverage for damage to the “non-covered items located in the
basement” to FEMA.

Specifically, Plaintiff disputed Nationwide’s

determination that Plaintiff’s property had a basement within the
meaning of the SFIP.
On October 19, 2016, FEMA advised Plaintiff that an
inspection by John Garner, an Oregon licensed engineer, was
“necessary because the elevations of the lowest floor and
adjacent grades of your building are unclear.”

Hickman Decl.,

Ex. 7 at 1.
On December 29, 2016, Gardner issued his Engineering Report

1

The June 3, 2016, letter is not in the record.

5 - OPINION AND ORDER

in which he concluded:
It is my opinion that a reasonable interpretation
of ground level should involve a natural drainage
runoff. Simply considered, if a portion of a
building would accumulate water in rains unless
water is pumped or drained away, it is reasonably
below ground level. Thus, if all areas of the
floor are below ground level on all sides, the
floor would hold water unless it were physically
drained through plumbing or storm drains.
Conversely, if an area of the floor is above
ground level, then it would not hold water and
water would drain away naturally.
* * *
In this particular case, the lower floor units are
blocked from any natural drainage by the grassy
area between them and the beach. The only way
runoff can drain away is via French drains on the
patios. The lower level below ground level on all
sides, and the nearest lower ground is more than
25 feet away, outside the sea wall. The grassy
area and sea wall block any natural positive
drainage away from the interior, thus it is
reasonable to conclude that the interior units are
below ground level on all sides.
Based upon a review of the available data, it is
my opinion that the lower floor of the Surfsand
Resort Beachfront Building is below ground level
on all sides and thus does [in] fact meet the
definition of a basement as denied in the Standard
Flood Insurance Policy. This floor should be
considered a basement for policy purposes,
including Units 1101-1112, the hallway, and the
storage area.
Decl. of James Guse, Ex. 7 at 6-7.
On March 23, 2017, Nationwide advised Plaintiff that it had
reviewed Gardner’s Report and that it was “upholding our denial
of non-covered items in a basement as indicated in our letter of
June 3, 2016.”

Guse Decl., Ex. 8 at 1.

6 - OPINION AND ORDER

On June 2, 2017, Plaintiff filed an action in this Court
against Nationwide and Harleysville asserting claims for breach
of insurance contract and negligence per se.

Plaintiff seeks

damages in the amount of $396,234.92, “which represents the
amount of the covered loss denied by Defendants”; seeks
attorneys’ fees; and requests a jury trial.
On August 21, 2017, Defendants filed a Motion to Dismiss
Count II of Plaintiff’s Complaint and a Motion to Strike Jury
Demand in which they sought an order dismissing Plaintiff’s claim
for negligence per se, request for attorneys’ fees, and demand
for a jury trial.
On October 16, 2017, the Court issued an Opinion and Order
in which it granted Defendants’ Motion to Dismiss and Motion to
Strike Jury Demand.
On March 15, 2018, Plaintiff filed a Motion for Summary
Judgment.

On April 5, 2018, Defendants filed a Cross-Motion for

Summary Judgment.

The Court took the Motions under advisement on

May 3, 2018.

STANDARDS
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Washington Mut. Ins. v. United

States, 636 F.3d 1207, 1216 (9th Cir. 2011).
7 - OPINION AND ORDER

See also Fed. R.

Civ. P. 56(a).

The moving party must show the absence of a

genuine dispute as to a material fact.
673 F.3d 1218, 1223 (9th Cir. 2012).

Emeldi v. Univ. of Or.,

In response to a properly

supported motion for summary judgment, the nonmoving party must
go beyond the pleadings and point to "specific facts
demonstrating the existence of genuine issues for trial."

In re

Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010)
"This burden is not a light one. . . .

The non-moving party must

do more than show there is some 'metaphysical doubt' as to the
material facts at issue."

Id. (citation omitted).

A dispute as to a material fact is genuine "if the evidence
is such that a reasonable jury could return a verdict for the
nonmoving party."

Villiarimo v. Aloha Island Air, Inc., 281 F.3d

1054, 1061 (9th Cir. 2002)(quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).

The court must draw all

reasonable inferences in favor of the nonmoving party.
v. Verity, Inc., 606 F.3d 584, 587 (9th Cir. 2010).

Sluimer

"Summary

judgment cannot be granted where contrary inferences may be drawn
from the evidence as to material issues."

Easter v. Am. W. Fin.,

381 F.3d 948, 957 (9th Cir. 2004)(citing Sherman Oaks Med. Arts
Ctr., Ltd. v. Carpenters Local Union No. 1936, 680 F.2d 594, 598
(9th Cir. 1982)).
"A non-movant's bald assertions or a mere scintilla of
evidence in his favor are both insufficient to withstand summary
8 - OPINION AND ORDER

judgment."

F.T.C. v. Stefanchik, 559 F.3d 924, 929 (9th Cir.

2009)(citation omitted).

When the nonmoving party's claims are

factually implausible, that party must "come forward with more
persuasive evidence than otherwise would be necessary."

LVRC

Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009)
(citing Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1149
(9th Cir. 1998)).
The substantive law governing a claim or a defense
determines whether a fact is material.

Miller v. Glenn Miller

Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

If the

resolution of a factual dispute would not affect the outcome of
the claim, the court may grant summary judgment.

Id.

DISCUSSION
Plaintiff moves for summary judgment on the ground that
there is not any genuine dispute of material fact that the lowest
level of the Surfsand Resort is not a basement within the meaning
of the SFIP.

According to Plaintiff, it is, therefore, entitled

to coverage for damages in the amount of $396,234.92, “which
represents the amount of the covered loss denied by Defendants.”
Defendants, on the other hand, move for summary judgment on
the ground that it paid Plaintiff $98,765.08, which is the amount
of the only Proof of Loss that Plaintiff submitted to Defendants.
Moreover, Plaintiff has never submitted a supplemental Proof of
9 - OPINION AND ORDER

Loss for the $396,234.92 that it now seeks in this action, and,
therefore, Plaintiff has not satisfied a condition precedent of
the SFIP.

Defendants also contend the lowest level of the

Surfsand Resort is a basement within the meaning of the policy,
and, therefore, Plaintiff’s requested damages are not covered
under the policy.
I.

National Flood Insurance Program
Congress enacted the NFIA in 1968 in response to the fact

that flood disasters were creating personal hardships and
economic distress that was “increasing [the] burden on the
Nation's resources” and the exposure to flood losses was
“growing.”

42 U.S.C. § 4001(a).

The NFIA created the National

Flood Insurance Program (NFIP) under the administration of FEMA
to “mak[e] flood insurance coverage available on reasonable terms
and conditions.”

Id.

See also 42 U.S.C. § 4011.

Flood

insurance under the NFIP is sold to qualified applicants either
directly by FEMA or by private insurance companies known as
“write-your-own” (WYO) Companies.

44 C.F.R. § 62.23.

A WYO

Company enters into a standardized agreement with FEMA that
authorizes the WYO Company to issue flood insurance in its own
name and assigns the WYO Company the responsibility for “the
adjustment, settlement, payment and defense of all claims arising
from policies of flood insurance it issues under the Program.”
44 C.F.R. § 62.23(d).
10 - OPINION AND ORDER

Nevertheless, the ultimate responsibility

for paying all claims remains with FEMA.

See 42 U.S.C.

§ 4017(a).
The NFIA regulations specify the required terms and
conditions of policies written under the NFIP.

For example, the

SFIP must advise the insured that FEMA is providing insurance
“under the terms of the National Flood Insurance Act of 1968 and
its Amendments, and Title 44 of the Code of Federal Regulations.”
44 C.F.R. pt. 61, app. A(1), art. I.

The SFIP also must identify

the scope of coverage, the exclusions, the deductions, and the
general conditions applicable to coverage, adjustment, and
payment.

The SFIP must also include the following provision:
This policy and all disputes arising from the
handling of any claim under the policy are
governed exclusively by the flood insurance
regulations issued by FEMA, the National Flood
Insurance Act of 1968, as amended (42 U.S.C.
§ 4001, et seq.), and Federal common law.2

44 C.F.R. pt. 61, app. A(1), art. IX.

WYO Companies cannot waive

or vary the terms or conditions of the SFIP without the express,
written consent of the Federal Insurance Administrator.

44

C.F.R. § 61.13(d).
In addition, the SFIP also must include the following
conditions and limitations for filing actions for claims under
SFIPs and for disputes arising out of the handling of any claim
under an SFIP:

2

The SFIP at issue included all of the required language
identified above.
11 - OPINION AND ORDER

You may not sue us to recover money under this
policy unless you have complied with all the
requirements of the policy. . . . This
requirement applies to any claim that you may have
under this policy and to any dispute that you
may have arising out of the handling of any claim
under the policy.
44 C.F.R. pt. 61, app. A(1), art. VII(R).

See also 42 U.S.C.

§ 4072; 44 C.F.R. § 62.22.
“In short, [SFIP], claims under [SFIPs], and disputes
relating to the handling of claims under [SFIPs] are highly
regulated.”

Woodson v. Allstate Ins. Co., 855 F.3d 628, 622-23

(4th Cir. 2017).

See also Suopys v. Omaha Prop. & Cas., 404 F.3d

805, 809 (3d Cir. 2005)(“Because any claim paid by a WYO Company
is a direct charge to the United States Treasury, strict
adherence to the conditions precedent to payment is required.”)
(citing Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-85
(1947); Flick v. Liberty Mut., 205 F.3d 386 (9th Cir. 2000)
(strict compliance is applied to policies written by WYO
Companies under the NFIP because flood-loss claims are paid from
United States Treasury).
II.

Plaintiff failed to satisfy a condition precedent of the
SFIP.
As noted, Defendants move for summary judgment on the ground

that Plaintiff has never submitted a supplemental Proof of Loss
for the $396,234.92 that it now seeks in this action.

According

to Defendants, therefore, Plaintiff has not satisfied a condition
precedent of the SFIP, and, accordingly, Plaintiff may not bring
12 - OPINION AND ORDER

a claim for those damages.
It is undisputed that Plaintiff submitted to Defendants a
Proof of Loss on May 4, 2016, asserting a claim for $98,765.08.
As noted, however, the record does not reflect Plaintiff
submitted any supplemental or additional Proof of Loss to
Defendants for the $396,234.92 that it now seeks as damages.
The SFIP provides in relevant part:
In case of a flood loss to insured property, you
must:
* * *
3.

Prepare an inventory of damage property
showing the quantity, description, actual
cash value, and amount of loss. Attach all
bills, receipts, and related documents.

4.

Within 60 days after the loss, send us a
proof of loss, which is your statement of the
amount you are claiming under the policy
signed and sworn to by you, and which
furnishes us with the following information:
* * *
f.

Specifications of damaged buildings and
detailed repair estimates; [and]
* * *

i.

The inventory of damaged property
described in J.3 above.

Hickman Decl., Ex. 1 at Art VII(J)(4)(emphasis added).
44 C.F.R. § 61, App. A(2), Art. VII(J)(4)(same).

See also

The SFIP

provides if the insurer rejects the Proof of Loss “in whole or in
part,” the insured “may”:

13 - OPINION AND ORDER

a.

Accept such denial of your claim;

b.

Exercise your rights under this policy; or

c.

File an amended proof of loss, as long as it
is filed within 60 days of the date of the
loss.

Hickman Decl., Ex. 1 at Art VII(M)(2).
The Ninth Circuit and other courts have held a timely signed
and sworn Proof of Loss is a condition precedent to an insured
obtaining benefits under an SFIP policy.

See Pecarovich v.

Allstate Ins. Co., 309 F.3d 652, 659-60 (9th Cir. 2002)
(concluding the plaintiff failed to satisfy the condition
precedent of the SFIP when he did not file a proof of loss).

See

also Dickson v. Am. Bankers Ins. Co. of Fl., 739 F.3d 397, 399
(8th Cir. 2014)(“[T]he proof of loss requirement is a regulatory
limit on the disbursement of funds through a federal insurance
program; as such ‘it is to be strictly construed [for it] serves
as a condition precedent to recovery under the SFIP.’” (quoting
Gunter v. Farmers Ins. Co., 736 F.3d 768, 773 (8th Cir. 2013));
DeCosta v. Allstate Ins. Co., 730 F.3d 76, 84 (1st Cir. 2013)
(“Given that it is the government's liability at stake in any
suit against a WYO insurer, compliance with the proof-of-loss
provision serves as a “condition[ ] precedent to a waiver by the
federal government of its sovereign immunity.”).
Although the Ninth Circuit has not addressed the issue,
other courts have held an insured must submit an additional or

14 - OPINION AND ORDER

supplemental proof of loss as a condition precedent “to recover
an additional amount on a preexisting claim under a[n] SFIP.”
Cummings v. Fidelity Nat. Indem. Ins. Co., 636 F. App’x 221, 22324 (5th Cir. 2016).

See also Dickson, 739 F.3d at 399 (“a signed

and sworn proof of loss claims only the amounts listed in those
forms, and the insured must timely file an additional proof of
loss to claim any additional amount of money.”).

As the Fifth

Circuit explained in Cummings,
a policy of “‘insurance issued pursuant to a
federal program must be strictly construed and
enforced.’” Monistere, 559 F.3d at 394 (quoting
Gowland, 143 F.3d at 954). “Because insurance
companies act as ‘fiscal agents' of the government
under the National Flood Insurance Program, all
policy awards deplete federally allocated funds.”
Id. (quoting In re Estate of Lee, 812 F.2d 253,
256 (5th Cir. 1987)). Accordingly, “‘not even the
temptations of a hard case’ will provide a basis
for ordering recovery contrary to the terms of a
regulation, for to do so would disregard ‘the duty
of all courts to observe the conditions defined by
Congress for charging the public treasury.’” Id.
(quoting Forman v. Fed. Emergency Mgmt. Agency,
138 F.3d 543, 545 (5th Cir. 1998)). See generally
Richmond Printing LLC v. Dir. Fed. Emergency Mgmt.
Agency, 72 F. App’x 92, 97 (5th Cir. 2003)(citing
Kerr v. FEMA, 113 F.3d 884 (8th Cir. 1997))
(finding that completion of the proof of loss is
the insured's own responsibility and “any reliance
on statements made by the adjuster that
contradicted the terms of the SFIP was
unreasonable as a matter of law; the insured had a
duty to read the policy and acted unreasonably in
relying on adjusters provided only as a
‘courtesy’”); see also Gowland, 143 F.3d at 955
(quoting Fed. Crop Ins. Corp. v. Merrill, 332 U.S.
380, 385 (1947))(“Requiring [insured parties] to
turn square corners when dealing with the Treasury
‘does not reflect a callous outlook. It merely
expresses the duty of all courts to observe the
15 - OPINION AND ORDER

conditions defined by Congress for charging the
public treasury.’”).
636 F. App’x at 224.
Plaintiff does not dispute it failed to file a supplemental
or additional proof of loss seeking the additional damages of
$396,234.92 that it now seeks.

Plaintiff, however, asserts it

provided all “of the documentation regarding damaged areas . . .
and its contents” to claims adjuster Jacob Valencia who
“specifically excluded items that he considered to be in a
basement.”

Decl. of Ted Stark at ¶ 4.

Plaintiff points out that

Valencia advised Plaintiff in February and April 2016 (before
Plaintiff filed the May 2016 proof of loss) that “a Proof of Loss
was only to act as a ‘minimum’ of items that are flood damaged.
He further indicated that any ‘covered, omitted or reasonable
cost difference’ could be addressed with a Claim for Additional
Payment (CAP).”

Id.

Plaintiff argues Valencia was acting as

Defendants’ agent, and, therefore, Valencia’s refusal to submit
all of the damages either waived the requirement or absolved
Plaintiff of the responsibility to submit a supplemental proof of
loss as to the damages that Plaintiff now seeks.

Arguments

similar to those made by Plaintiff, however, have been rejected
by various courts.
For example, the Eighth Circuit explained in Dickson:
The SFIP defines the proof of loss as the
insureds' signed and sworn “statement of the
amount [they] are claiming under the policy.”
16 - OPINION AND ORDER

44 C.F.R. pt. 61 app. A(1), art. VII(J)(4).
Independent insurance adjusters may assist the
insureds by providing or preparing this proof of
loss form, but the SFIP is clear that even with
such assistance the insureds must use their own
judgment concerning the amount of loss they claim.
* * *
Among the significant SFIP provisions concerning
the proof of loss requirement is a rule that “[i]n
completing the proof of loss, [the insureds] must
use [their] own judgment concerning the amount of
loss and justify that amount.” 44 C.F.R. pt. 61
app. A(1), art. VII(J)(5). While insurance
adjusters may assist with preparing the proof of
loss form, they do so as “a matter of courtesy
only” and insureds are ultimately responsible for
ensuring their claim is timely filed. Id., art.
VII(J)(7). Thus as a matter of law, the
[plaintiffs] were the only parties responsible for
ensuring compliance with the proof of loss
requirement, including the determination of the
“amount of loss.”
* * *
[T]he SFIP requires insureds to use their own
judgment to determine the amount of loss they
claim. It was therefore solely the [plaintiffs']
own responsibility to file a timely proof of loss
for any amount they believed was covered by the
policy.
Dickson, 739 F.3d at 399-400.

Similarly, in DaCosta the court

noted
FEMA must provide express written consent . . . to
waive any of the requirements outlined in [an]
SFIP. The SFIP's waiver provision states, “[t]his
policy cannot be changed nor can any of its
provisions be waived without the express written
consent of the Federal Insurance Administrator.
No action we take under the terms of this policy
constitutes a waiver of any of our rights.”
44 C.F.R. pt. 61, App. a(1), Art. VII(D).

17 - OPINION AND ORDER

The SFIP's stringent waiver provision reflects the
fact that private insurers are “fiscal agents of
the United States,” 42 U.S.C. § 4071(a)(1), as
opposed to general agents. See McGair, 693 F.3d
at 96. Thus, consistent with their duty to
strictly enforce the SFIP, private insurance
companies can “[vary] the terms of a policy only
with FEMA's express written consent.” Jacobson,
672 F.3d at 175. . . . [T]he SFIP “explicitly
preclude[s] oral waiver or waiver by conduct.
730 F.3d at 87.
In Dickson the court also rejected the plaintiffs’ assertion
that their claims adjuster engaged in misconduct when it
inaccurately advised them about the amount of their proof of
loss:
The adjuster explained . . . the [plaintiffs]
could “always submit a supplemental claim for
additional damages.” The [plaintiffs] were thus
alerted to the potential need for filing a
supplemental claim. . . . Moreover, the SFIP
provides clear directives that the [plaintiffs]
needed to file a proof of loss for their claim
. . . . The responsibility to ensure compliance
with the prerequisites for filing suit lay with
the [plaintiffs].
Id. at 401.
This Court adopts the reasoning of Cummings, DaCosta, and
Dickson and concludes Plaintiff’s submission of an additional or
supplemental proof of loss is a condition precedent to recover an
additional amount on a preexisting claim under an SFIP.

The

Court also concludes Valencia’s alleged refusal to submit a claim
for damages related to the part of Plaintiff’s property that he
believed to be a basement is insufficient to waive the

18 - OPINION AND ORDER

supplemental proof-of-loss requirement because Plaintiff had an
independent duty to determine the amount of its own loss; FEMA
did not waive the SFIP requirement to submit a supplemental proof
of loss; and Valencia, in fact, informed Plaintiff that “any
covered, omitted or reasonable cost difference could be addressed
with a Claim for Additional Payment.”

Thus, on this record the

Court concludes Plaintiff failed to comply with the condition
precedent for seeking additional damages within the time required
by the SFIP and FEMA.

The Court, therefore, grants that portion

of Defendants’ Motion for Summary Judgment based on Plaintiff’s
failure to file a supplemental proof of loss.
In addition, because the Court has concluded Plaintiff
failed to satisfy a condition precedent before bringing this
action, the Court does not have the authority to decide whether
the lower level of Plaintiff’s property is a basement within the
meaning of the SFIP, and, therefore, the Court does not express
any opinion on that issue.

Accordingly, the Court denies

Plaintiff’s Motion for Summary Judgment.

CONCLUSION
For these reasons, the Court DENIES Plaintiff’s Motion (#32)
for Summary Judgment, GRANTS Defendants’ Cross-Motion (#36) for

19 - OPINION AND ORDER

Summary Judgment, and DISMISSES this matter.
IT IS SO ORDERED.
DATED this 28th day of June, 2018.
/s/ Anna J. Brown
ANNA J. BROWN
United States Senior District Judge

20 - OPINION AND ORDER